Petrobras (Petroleo Brasileiro) is a state-controlled integrated energy company. Headquartered in Rio de Janeiro, Petrobras, along with its subsidiaries, engages in the exploration, production, refining, and transportation of oil from reservoir wells, shale oil, and other rocks. It owns and operates thermoelectric, petrochemical, and fertilizer plants, and is involved in the purchase, production, transportation, and distribution of liquefied natural gas and natural gas. Most recently, Petrobras formed a joint venture with Mitsui Group of Japan to produce biofuels.
Petrobras’s creation and early history are intimately related to Brazilian economic nationalism and its import-substituting industrialization strategy. Public distrust of international oil companies and their geologists, who claimed that Brazil had very limited oil wealth, encouraged the nationalization of undiscovered oilfields under the aegis of the National Petroleum Council in 1939.
The combination of wartime trade disruptions in the 1940s with modest domestic exploratory efforts led to a severe shortage of petroleum, which, along with a surge in national security concerns, fueled a popular state-backed campaign for the development of the Brazilian oil industry. Under the banner “The Oil Is Ours” and with the twin objectives of supplying the nation hydrocarbons and saving on scarce foreign exchange, Petrobras was founded in 1953 under the presidency of Getulio Vargas. Despite regular and intense politicization at the top, Petrobras delivered on its mission and stood up to the formidable challenge of building an oil industry from scratch, without previous knowledge, lacking a skilled labor force, and having practically nonexistent reserves to start with.
This achievement was a two-stage process, as historian Laura Randall suggests. First, Petrobras concentrated on building refining capacity to substitute imported hydrocarbon products for those refined domestically; subsequently, it increased crude oil production. Brazil’s foreign dependence on oil dropped from around 90 percent in the mid-1950s to less than 50 percent in the 1990s and keeps decreasing. Yet this is unlikely to be Petrobras’s biggest accomplishment. World technological leadership in the exploration and production of oil in deep water (300–1,500 m) and ultradeep water (1,500 m and more) has proven profitable and is most promising.
Exploration And Production
Petrobras’s offshore explorations in the Campos Basin first paid off in 1974 with the discovery of the Garoupa field in shallow waters (120 m). Production started in 1977. Since then, more than 40 oilfields have been found off the Brazilian coast, among which Roncador, Marlim, and more recently Tupi were so-called elephant fields—those containing proven reserves over 1 billion barrels. These deepand ultradeep-water reservoirs now account for more than 80 percent of Brazil’s oil production and proven reserves.
The challenges in economically exploiting oil at these depths are remarkable and have catapulted Petrobras to the technological frontier, via horizontal drilling, few and high-productivity wells, high-resolution stratigraphic analysis, and 3D visualization techniques. Petrobras’s deep and ultradeep-water discoveries are not only meeting Brazil’s desire for self-sufficiency in oil, but also challenging the oldest myth in the industry, the peak oil theory—the idea that the rate of global oil production had reached a maximum.
As of 2007 Petrobras had 69,000 employees, ran and/or owned more than 8,000 service stations, operated 77 fixed and 32 floating production platforms, refined some 2 billion barrels per day (bpd) from 15 refineries, produced another 2 billion bpd from around 13,000 productive wells, boasted proven oil reserves of 11.7 billion barrels, and relied on a fleet of more than 150 tankers to transport its products.
Petrobras is a player in world energy markets. Its sheer size and technological leadership have made it one of the “new seven sisters” (the industry’s name for the dominant companies in the production/distribution of oil). On the financial side, Petrobras’s net earnings were $102.9 billion, with net income of $12.9 billion and $27.3 billion worth of investments. Its market value exceeded $100 billion, making it the most profitable public company in South America—as well as the most valuable of all, private and public—and ranking it 50th among the world’s largest firms.
The company has ventured outside Brazil and is particularly strong in Argentina, Bolivia, Colombia, Ecuador, Peru, Uruguay, and Venezuela. It also does business in countries including Angola, China, England, Iran, Mexico, Nigeria, Norway, Turkey, and the United States. Its shares are traded in the world’s main stock exchanges, and its bonds are among the best rated in Brazil’s capital markets.
- Carlos Bruhn et al., Campos Basin Characterization and Management: Historical Overview and Future Challenges (Offshore Technology Conference, 2003);
- Petrobras, “Petrobras in Numbers,” www2.petrobras.com.br (cited March 2009);
- Laura Randall, The Political Economy of Brazilian Oil (Praeger, 1993);
- Joshua Schneyer, “Brazil, the New Oil Superpower,” BusinessWeek Online (November 20, 2007);
- Peter Smith, “Petrobras: The Politicizing of a State Company, 1953–64,” The Business History Review (v.46/2, 1972);
- Daniel Yergin, The Prize: An Epic Quest for Oil, Money and Power (Free Press, 1991).
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